The Vietnam National Petroleum Group (Petrolimex) on July 28 reduced the price of RON 92 gasoline by 330 VND (1.6 US cents) to 25,310 VND (1.21 USD) per litre.
The move followed a joint decision by the ministries of industry and trade and finance, which asked fuel dealers to cut retail prices.
This is the first time that the retail price of petrol has been reduced this year after five continuous increases. However, the decrease was modest as compared to the total increase of 1,450 VND (7 cents).
The diesel selling price was lowered by 350 VND to 22,330 VND per litre (1.05 USD), becoming the second reduction within 10 days.
The price of kerosene was also reduced by 350 VND per litre to 22,460 VND (1.07 USD) while that of mazut remained unchanged at 18,810 VND per kilo.
According to the ministries, retail prices were about 275 VND (1.3 cents) lower than the base price, which is typically calculated as the import prices plus taxes, costs and profit quotas for fuel dealers.
With a previous subsidy of 670 VND (3.2 cents) per litre from the price stabilisation fund, retail prices were about 395 VND (1.9 cents) higher than the base price.
With falling world petrol prices, the ministries reduced the stabilisation fund subsidy level to 600 VND (2.9 cents) per litre.
As retail prices of diesel and kerosene remained 346 VND (1.6 cents) higher than the base price, authorities move to decrease prices on July 28.
Subsidies for mazut, a low quality fuel oil used in generating plants, were discontinued with retail prices sitting at 26 VND (0.1 cent) per kilo lower than the base price.
Statistics from the Vietnam Petroleum Association on July 28 showed that fuel prices in the Singapore market – from where Vietnam sources most of its fuel, had reduced significantly.
On July 24, the price of petrol A92 was 115.6 USD a barrel, diesel was 118.5 USD a barrel, kerosene 118.81 USD a barrel while mazut was 597.87 USD per tonne.
The association said that after using the stabilisation fund, all items showed a profit.
On July 18, the two ministries asked fuel dealers to reduce retail prices of oil by 136-174 VND (0.6-0.8 cents) a litre while not increasing petrol prices.
Under the Government's Decree 84/2009/ND-CP, traders can adjust petrol prices up to 7 percent in line with world prices.